One of the state’s largest healthcare providers, CHI St. Vincent, recently partnered with Conway Regional Medical Center to form an entity that will be active statewide in creating alliances to help both small and larger hospitals become leaner and more efficient, enhancing the ability of the hospitals to fulfill their mission despite the challenge of regulations and reimbursements.
“The Arkansas Health Alliance is a partnership starting with Conway Regional and CHI St. Vincent to focus on things to bring value back to each entity and position each to be successful long term,” said Jim Lambert, who was president and CEO of Conway Regional for 18 years before becoming the new president of the Arkansas Health Alliance. “The goal is to add other community hospitals and healthcare systems to the partnership and, through partnership, bring value to all involved. We are developing clinically integrated networks, going after risk-based contracting, looking at Medicare shared savings, and doing this in combination with each other to improve the quality of care while reducing costs. We can reduce costs by contracting for certain supplies and services. So we can drop costs or slow down increases while also standardizing care and improving the quality of care.”
Lambert said the partnership is an exciting opportunity to build an organization that has the potential to help not only Conway Regional, but other independent community hospitals. He said he knows through serving on the board of the Arkansas Hospital Association that many independent hospitals are seeking an ally in today’s rapidly changing healthcare environment.
The trend for state and nationwide partnerships is being driven by the challenges to healthcare providers maintaining compliance with regulations at a time of changing reimbursements. With all the different models being developed, it is hard to be an independent hospital and do all that is required.
“In switching from the old reimbursement model of fee for service to paying for value, you are taking the risk for that,” Lambert said. “It takes a whole different level of skill sets and infrastructure to support that. Smaller hospitals have a hard time building that infrastructure. The nice thing is that CHI St. Vincent has built a lot of infrastructure that others can access at a local level while still maintaining their independence.”
While in the startup phase of the Arkansas Health Alliance, Lambert is out discussing with providers what the alliance can bring to them and their organization. “We will decide what things we can work on together and coordinate that activity,” Lambert said. “The alliance won’t be dictating what has to be done. We will decide together what to do and how to make that work for everyone’s benefit.”
Conway Regional has 1,200 employees and a 156-bed hospital. An advantage for Conway Regional in selecting CHI St. Vincent is that it is part of CHI, one of the nation’s largest non-profit health systems with 105 hospitals across the U.S. “CHI has a large infrastructure behind them,” Lambert said.
Healthcare is a competitive business, but it is also one where, increasingly, success depends on cooperation to achieve economies of scale and reduce costs. Lambert expects to see the trend toward consolidation of the market for all different size hospitals to survive.
Many other healthcare administrators are facing the same situation that led Conway Regional to form an alliance with CHI St. Vincent.
“You look at what is coming at you and ask, ‘How do I manage all I’m doing now, while being expected to improve care and reduce costs while transitioning to a new payment model at the same time? What is the best way to go forward?” Lambert said. “Sometimes it is a sale. But other times an alliance helps get some of the services and economies of scale that happen with a larger organization without giving up independence. It made sense for Conway Regional and may make sense for other hospitals in the state.”
Lambert said while this type of alliance is new to Arkansas, it is not a new model. States like Indiana, Iowa and Louisiana have had good success with alliances. “We are trying to learn from those organizations,” he said. “Some have been in place a long time and some are just developing. The rural nature of our state makes it more challenging. I feel Arkansas hospitals have been fairly efficient. Our reimbursement rates are lower than in other parts of the country, so we have to be more efficient. We are striving to help improve our health outcomes across the state while striving to improve our reimbursement rates, and are hoping that something like this can help organizations continue to do that.”
One way to improve the health of the population is wellness centers. More large employers in the state have wellness initiatives. Conway Regional has had a wellness initiative in place for employees for several years that is incorporated into their managed care.
“CHI St. Vincent has a strong commitment to wellness as well,” Lambert said. “Every employer is trying to help with wellness for employees because the cost of healthcare is so high. The more we can encourage that, the better we are all served. Conway Regional has seen some significant benefits from that in its health plan. Healthier employees are happier and more productive at work and in private life. It is win, win, win if you can make this work.”
There are storm clouds ahead regarding reimbursements for healthcare providers that are causing concern. Lambert said the private option Medicaid expansion in the state has been very helpful for hospitals because they have started getting reimbursed for care they weren’t getting paid for previously. Currently, about 240,000 people receive coverage under the private option Medicaid expansion, but that is scheduled to expire at the end of 2016.
“The governor has a group looking at what is the best option for the state,” Lambert said. “There is a lot of concern about the affordability of extending the private option. If it goes away, it will be something hospitals will have to deal with. The private option has been a significant financial benefit and if it is eliminated, it is going to be difficult for hospitals to continue to provide the level of service their communities expect.”
